If for nothing else, Uber and Lyft will be remembered for one big thing: making payments all but invisible via a seamless transaction process that was pretty much revolutionary. In a short amount of time, that ideal has become the general gold standard for digital and mobile payments and commerce, a guiding light for all types of companies in all kinds of sectors.
However, being invisible is not nearly enough for payments operators as the new decade approaches, as Tom Villante, CEO and co-founder of Yapstone, recently discussed with Karen Webster from PYMNTS. Yapstone provides payment services to a variety of marketplace sellers and service providers, giving the company a front-seat view of the changes, innovations and disruptions that will define transactions into the 2020s. Moreover, beyond the invisible nature of payments these days, Villante said, it’s essential to offer something to stand out from the crowd — differentiating factors that appeal not only to consumers but also to the businesses serving them.
Speed is among those factors that are rapidly increasing in importance, no matter the geographical market, product or service. “There really is an expectation of instant payments,” said Villante, who started with apartment rentals and then moved into vacation and other property-focused transactions. His company is now eying the food delivery market, among others.
Speed can also translate into payments that are advanced to a marketplace seller before the service is delivered — think money going to the owner of a vacation rental that is booked six to nine months out. That money could be doing a variety of jobs during that time frame, and the seller is likely to be more loyal to the payment services provider that can make such a transaction happen. “It can be a really big advantage,” Villante told Webster.
A differentiating factor might also mean offering installment payments or loans at the point of the sale — growing trends in the worlds of digital and mobile payments and commerce. Think once more about that vacation rental. Depending on the house and property, and the number of people involved, such rentals can be pretty pricey, potentially deterring some buyers when faced with the actual costs during their online and marketplace searches. “Most (sellers) will not provide advanced funding for a ticket this large,” Villante said. However, a company that can offer such payment options can gain an edge over its competitors.
Role of Data
Of course, all that means the company providing the advanced payment takes on a significant amount of risk for chargebacks, frauds and other issues. The key? Data — and sophisticated algorithms to analyze all that information from various sources. For the installment payment options, for instance, Yapstone can do the KYC and onboarding work to determine the real risk involved. The same goes for offering those advanced payments to marketplace sellers.
“We take all that into consideration when pricing deals,” he said. “We take extra care and can look at those transactions carefully.” Indeed, Villante told Webster that fraud rates have dropped from 25 basis points to four because of data analysis.
Another key is to offer payment options that matter to consumers – and those options will vary greatly from country to country and market to market. “We have to offer payment methods that people actually use,” he said. The trick is linking up with local or regional providers and then using their data and insight to make decisions about what payment methods to offer where, Villante said. “We link into providers that have hundreds of alternative payment methods,” he noted.
Further problems centered around payments will offer additional opportunities, Villante added. “We do like the food marketplace quite a bit,” he told Webster, noting that the complexities of the payments process in that area are attractive to a company that wants to stand out from the crowd. B2B transactions also offer new opportunities, and not only because that sector of the economy, in general, is yet to wean itself off dependence on paper checks. “Getting paid is so hard for contractors,” Villante said, mentioning one of the common problems in B2B payments.
As the new decade approaches, expect more focus on making payments as invisible as possible — the legacy of the ridesharing industry — and more work on increasing the speed of all types of transactions. So expect more payment service providers to strive to stand out from each other.